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Bharat Heavy Electricals Ltd.Environment & Strategy Overview
JM Financial India Conference
Mumbai
12thNov 2013
at
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Environment & Strategy Overview
Our Credentials
A US$ 9 billion Engineering & Manufacturing
enterprise of its kind in India A Maharatna company and a Major Integrated
Power Plant Equipment Manufacturer in the
World
Profit Making Company since 1971-72 Consistent Dividend Paying Company for over
thirty years (FY 1976-77 onwards)
References in over 75 countries
Installed base of more than 1,30,000 MW
17 Manufacturing Units + 1 Subsidiaries + 6 JVs +
Infrastructure to deal with 150+project sites
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Environment & Strategy Overview
We are Single Source with Multiple Solutions for
Infrastructure & Industrial Sectors.
Power Industry Oil & Gas
Transmission Transportation Renewable
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Environment & Strategy Overview
We are Indian CPSE with GOIs holding of 67.72%.
( As on 30th
Sept 2013)
President of
India
67.72%
FIIs
15.25%
MFs, FI, Banks
4.94%
Insurance Cos.
7.01%
Bodies Corp
1.25%
Individuals
3.39%
Others
0.44%
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Environment & Strategy Overview
Despite challenging economic environment, we have
registered good growth .
21,401
28,03334,154
43,337
49,510 50,156
2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
Turnover (Rs Crore)
21% CAGR
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Environment & Strategy Overview
Despite challenging economic environment, we have
registered good growth .
2,859 3,1384,311
6,011
7,0406,615
15% 12% 13% 15% 15% 14%
2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
Net Profit (Rs Crore) Profit Margin
Profitability
24% CAGR
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While maintaining leadership in Indian market
Order Inflows (Rs Crore)
50,270
59,678 59,037 60,507
22,096
31,65048%
63%
45%
61%
33%
67%
2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
Order Inflows PS Market Share
Total Order Book as on 30.09.13: Rs 1,02,380 crore
* Due to bulk tender where distribution was pre-decided
*
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Resulting in enhanced performance in project
execution
7,150
4,182
5,578
7,666
9,27010,340
2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
Commissioning/ Synchronization (MW)
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Performance H1 FY2013-14
Rs Crore Up to Sept 2013 Up to Sept 2012 % Change
Turnover 15,987 19,750 19%
Net Profit 921 2,195 58%
Order received 4,470 8,717 ---
Orders book total 1,02,380 1,22,300 ---
Projects Comm/Sync (MW)
4,764 3,505 ---
9
Rs Crore
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Today, BHEL is facing challenges from several fronts.
Uncertainties in
Global economy
Transportation of
Heavy & ODCconsignments
RisingCompetition
Disturbances in
target export
markets
Indian Power Sector
in stagnation
Critical Raw
Materials, BoP
Vendors, Skill deficit
Slowing IndianEconomy
Slackness in large
Infrastructure
Projects
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But, there are huge market opportunities. India can
not grow more than 8% without focus on power sector.
147
220
306
425
575
778
735
1097
1524
2118
2886
3880
2008-09 2011-12 2016-17 2021-22 2026-27 2031-32
Generation
Capacity (GW)
Electricity
Generation (bln KWh)
State of Indian Power Sector
Generation Capacity 226 GW
(59% Coal)
Per capita consumption
of electricity
879.22 kWh
Less than 1/3 of
world average
AT&C Losses 26.15%
Demand- Supply deficit 8-9%
Peak demand-supply
deficit
13-14%
Avg cost of electricity 378 paisa/ unit
Realization 301 paisa/ unit
(80%)
Integrated Energy Policy 2006, Planning Commission
@ 8% GDP growth
Source: CEA Monthly Report June 2013
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Practically every 2 houses out of 3 in India are supplied power generated from BHEL sets
Installed capacity- Utility*
2,01,036 MW (31.03.13)
Generation- Utility**
838 bn Units (2012-13)
BHEL
66% Others34%
BHEL
57%
Others43%
and we are placed well to harness these
opportunities
*Coal, Gas & CCP, Diesel, Nuclear & Hydro
** Coal, Nuclear & Hydro
500 MW thermal sets - consistent availability of more than 90% for the last six years. 170 coal based sets achieved OA higher than 90%.
167 BHEL supplied coal based sets clocked uninterrupted operation of more than 90 days during the
year out of wh ich, 53 sets ran twice continuously for more than 90 days and 29 sets ran continuously
for more than 200 days.
Trombay 5 (500 MW) and Singrauli 5 (200 MW) clocked uninterrupted operation throughout the year.
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BHEL supplied power plant equipment exhibit world
class performance.
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* Average performance of thermal sets during 2007-2011; Source: North American Electric Reliability Council (NERC); 2013
84.73%
68.98%
10.41%4.89%
86.80%85.78%
6.56%6.64%
OperatingAvailability
(OA)
Plant LoadFactor (PLF) PlannedMaintenance ForcedOutages
due to Equip.
85.73%
62.80%
9.74%4.51%
88.97%
80.16%
6.15% 4.89%
OperatingAvailability
(OA)
Plant LoadFactor (PLF)
PlannedMaintenance
ForcedOutages
due to Equip.
Performance of 400-599 MW Sets* Performance of 200-299 MW Sets*
NERC member countries (North America, Canada, Europe part) BHEL Sets
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Recent study* by CEA testifies our performance.
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Specific Fuel Consumption
(ml/kWh)
Operating Load Factor
(OLF)
Total Outages
Design Turbine Cycle Heat
Rate (THR) of 300 MW sets(kcal/kWh)
Design Turbine Cycle Heat
Rate (THR) of 600 MW sets(kcal/kWh)
1910
1893
1954
1922
2719
2527
Operating Heat Rate (OHR)
(kcal/kWh)
Study covers 12480 MW (36 units) BHEL sets and 8220
MW (22 units) Chinese sets
THR and OHR are on like to like basis (BHEL sets of 250
MW and 500 MW while Chinese sets of 300 MW and 600
MW). Also Chinese power plants uses feed heating fromHigh Pressure Turbine while BHEL does not.
OLF and Total Outages percentages are of those plants
which uses Indian Coal only and excludes plants who
remained shut for very long time during study.
SFC comparison is of those plants which uses Indian
Coal.
* Analysis of Chinese equipment vis--vis Indian(BHEL) Equipment, Central Electricity Authority, New Delhi India, May 2013
BHEL Equipment Chinese Equipment
71.6%
57.2%
3.06
6.13
18.7%
23.5%
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As a result, we are market leader in Indian Power
Sector.
Chinese
Comp,
18496,
34%
Other
ForeignComp,
8227, 15%
BHEL,
25385,
46%
Other
Indian
Comp,
2856, 5%
XI Plan 2007-12 (54,964 MW)* XII Plan 2012-17 (1,42,603 MW)
Chinese
Comp,
42155,
30%
Other
Foreign
Comp,10670, 7%
BHEL,
66067,46%
Other
Indian
Comp,
23711,
17%
*Actual Achievement
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Our Industry Sector Business: diverse, slated to grow
Transmission
7-9%
Transportation
3-5%
Captive Power
Plants & other
Industrial Products
12-15%
Transmission
Transformers
Switchgear
Indl. Control Gear / Control Panels
Capacitors
Insulators
HVDC/ Transmission Projects etc
Transportation
Traction machines
Traction Control gears
IGBT Propulsion system
DESL, AC Locos / DG Sets / etc
Captive Power Plants & other Industrial
Products
CPP - Indl. TG / Boiler Sets
Industrial Machines Compressors
Oil Field Equipment, Valves etc
FY 2012-13
FY 2011-12
FY 2010-11
Contribution to total Turnover: 22-28%
Renewable & others
Solar
Water
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We are focusing on 6-Point Agenda to meet Strategic
Plan 2017 targets.
1
2
3
4
5
Engineering
&
Technology
6 Timely investments
-Planned & scalable
Inorganic Growth
Supply Chain Agility
Skill Enhancement
Effective Site
Management &
Information Systems
Operations Improvement
Lean, DTC, PSM
Global Sourcing, Indigenization
Upgrade Product Range in
Thermal, Gas & Hydro
Generation
Nuclear Power, Transmission,
Transportation, Renewable
Energy, Water
Investment in R&D
Absorption of Supercritical
Technology
Fast-track Technology &
Product Development for
IGCC, 765/ 1200 kV
Transmission ,etc.
Performance & Potential alignment of new
inductees with Companys Challenges
Leadership Development
Technical/ Functional Competency
Development
Engineering
&
Technology
Capability
Enhancement
Accelerated
Project
Execution
Diversification
BHEL
Product
CostCompetitiveness
& Quality
People
Development
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Innovation is our key focus area to steer future
growth.
175213
263 303351
385
FY08 FY09 FY10 FY11 FY12 FY13
Filing of Patents & Copy Rights (Nos.)
463
690
829
982
1199
1248
FY08
FY09
FY10
FY11
FY12
FY13
R&D Expenditure (Rs Cr)
2719
55706723
78099832 9643
FY08 FY09 FY10 FY11 FY12 FY13
Turnover from in-house
developed products (Rs Cr)
2.5%
~20%
2170
Today our R&D focus is globally recognized (CII-Thompson Reuters Innovation Award 2010)
Forbes ranks BHEL at No.9 in list of World's 100 Most Innovative Companies(July 2011)
145 Mission & Technology Planswith over 1500 R&D projects identified for establishing self sufficiency in the
areas of UHV Transmission, Transportation, Ultra Super Critical Plants, Renewable energy, IGCC, Water etc.
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We are developing strong capabilities in Product
Development & Engineering.
270/300/525/600/700 MW sub-critical sets
introduced
Advance Class Gas Turbines tech in place
765 & 1200 KV UHVAC Transformer, Reactor
developed
IGCC development
Transportation-IGBT technology developed
for Loco & ACEMU
Sole supplier in world for 420 kN/320 kN
porcelain insulators for 800 kV HVDC lines
Products Development Supercritical Technology with Technology tie-ups
with Alstom (Boiler), Siemens (TG) & MHI (Pumps)
Rapid technology absorption in partnerships with
customers
Supercritical Orders basket 24 TGs and 27 SGs:
2X660 MW NTPC Barh (SG & TG) 3X660 MW Prayagraj PGCL, Bara (SG & TG)
2X800 MW APPDCL Krishnapatnam (SG)
2X800 MW RPCL Yermarus (BTG)
1X800 MW RPCL Edlapur (BTG)
1X700 MW KPCL Bellary (EPC)
2x660 MW NTPC Mauda (SG & TG)
3x660 MW Bajaj Hindustan, Lalitpur (BTG) 2x660 MW DVC, Raghunathpur (TG)
2x660 MW DB Power, Singrauli (BTG)
3x660 MW NTPC Nabinagar(SG)
2x660 MW OPGC, IB Valley, Banharpalli (BTG)
2x660 MW RRVUNL Suratgarh (EPC)
2X800 MW NTPC Gadarwara (TG)
Supercritical Domain
We are slated to play a key role in RDD&D in
India's first coal fired Advanced UltraSupercritical (AUSC) power plant in
association with Indira Gandhi Centre for
Atomic Research (IGCAR) and NTPC.
AUSC: 5% more efficiency; 12% savings in
coal; Less GHG emissions
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Environment & Strategy Overview
Our scale is another competitive advantage.
Acquired BHPVVizag as 100% subsidiary in 2008. Slated to enhance our capabilities in design,
fabrication, supply and erection of custom built process plant equipments. Turnaround in 2010-11.
Merged with BHEL in Aug 2013 wef Oct 2011.
BHEL Electrical Machines Ltd. (JVC between BHEL & KEL (Kasargod)/ GoK) for manufacturing of
products for Railways and Industries. Strategic move to enhance our presence in Transportation,
Industrial and Renewable Energy Sectors.
15000
MW
20000
MW
March 2010 March 2012
Inorganic Growth
20
New manufacturing plant operationalized:
Power Plant Piping Unit, Thirumayam
High Pressure Boiler Plant - Unit II, Trichy
Setting up the greenfield Power Equipment
Fabrication Plant at Bhandara, Maharashtra
Manufacturing Capacity Expansion New Manufacturing Plants
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Environment & Strategy Overview
Various initiatives are being taken to enhance pace of
execution.
Skill enhancement at ITIs in JV/PPP mode: Kabiguru (WB), Latur (Mah), Bajpur (UP),
Peramvalur (TN), Khandwa & Khaknar (MP), Haridwar (Uttranchal)
Leveraging WRI Trichy to train high pressure welders
Extensive training to Act Apprentices & Customers
Lateral/ Campus/ Special/ FTA Recruitment
Retired Specialists as Consultants, Re-Employment
Bridging Skill Deficit
Central monitoring system for PG test: 58 PG test (TG, SG & ESP) during 2012-13
Deploying additional Tools & Plants like heavy cranes suitable for erection of sets up to 800 MW.
Cranes available in PS (>=75 MT): 129 nos
Strand Jacks: 2 nos
Induction Heating Machines in PS: 294 nos
Site Capability Enhancement
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Environment & Strategy Overview
Various initiatives are being taken to enhance pace of
execution.
Vendor Base
Expansion
~1900 new Vendors added in 2012-13 & Vendor base >20,000
Developing BoP vendors: 40 (2008-09) + 84 (2009-10) + 42 (2010-11)
Procurement Office established in Shanghai, China
AMA Advanced Manufacturing Action for long lead items
TCA Technology Collaboration Agreement with Sheffield Forgemasters UK forlarge size forgings (up to 1000 MW)
Technology Collaboration Agreement with MHI Japan for FGD
IT e-Procurement , Reverse Auction (~36%)
Rate
Contracts
Long term Rate Contracts for Steel, Copper, CRGO, Transformer Oil
(contribution to total purchase ~25%)
Outsourcing Enhanced thrust is being given for outsourcing of low tech/ non-core
manufacturing
ACF Away Center Fabrication adopted by Trichy & Ranipet Units
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Environment & Strategy Overview
Our Diversification Strategies:
Expanding our Offerings in New Growth Areas
Highest rating SPV Power Plant orders of 10
MW each from NTPC for Unchahar and
Talcher.
Commissioned 5 MW grid-connected Solar
Photo Voltaic (SPV) Plant for KPCL at Mandya,
Karnataka
MoU signed with Govt. of Maharashtra to
consider the possibility of setting up an
integrated facility for the manufacturing of
Solar Photo Voltaic systems.
Joint Working Arrangement with Abengoa
Spain for Concentrated Solar Power Plant(CSP)
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Environment & Strategy Overview
Our Diversification Strategies:
Expanding our Offerings in New Growth Areas
MoU signed with Indian Railways for setting up a greenfield coach factory for Mainline Electric Multiple Unit
(MEMU).
Participation with global majors in the tender for setting
up a factory for Electric Loco factory at Madhepura and
Diesel Loco factory at Marhowra respectively.
Catering to RDSO's requirement for conversion ofexisting DC EMUs to 25 kV AC EMUs, BHEL has
successfully type tested a 1200 kVA AC EMU transformer
which matches the dimensions of the conventional AC
EMU transformer with a 20% enhanced output.
Orders for State-of-the-art propulsion equipment for
6000 HP Electric Locomotives and 1400 HP AC EMUs
(IGBT based) under execution
Executing an order for 200 numbers of 5,000 HP 25 kV
AC Mainline Electric Locomotives (Type WAG -7) for
Indian Railways.
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Environment & Strategy Overview
Our Diversification Strategies:
Expanding our Offerings in New Growth Areas
Manufacturing Associate Agreement with GE India Industrial PrivateLimited (GEIIPL), for Water Treatment Equipment.
BHEL will be able to provide more cost-effective membrane-based
water treatment systems for power plants and industrial sector for all
type of input water like sea water, brackish water and waste water.
765 kV Transformers & Reactors ordersreceived from Megha
Engineering and Infrastructure Ltd. for Western UP Transmission
System upgradation, and BIDCO for the upcoming 3x660 MW Lalitpur
TPS.
To improve the stability and reliability of power systems, BHEL has
developed and manufactured a 3-Phase, 315 MVA, 400 kV class, Phase
Shifting Transformer with state-of-the-art features. It will be installed
at APGENCO Kothagudem.
Indias first and highest rating indigenously developed 1200 kV
class Transformer successfully test charged to cater to 1200 kVUHVAC Transmission Systems
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Environment & Strategy Overview
Our Diversification Strategies:
Expanding our Offerings in New Growth Areas
Steam generators for new rating 700 MWe
Nuclear sets
Tripartite JV with NPCIL & Alstom in process for
conventional island of Nuclear Projects for 700
MWe & above
MoU with GE-Hitachi for cooperation in Nuclearisland equipment for Power plants to be set up by
NPCIL
Order secured from NPCIL for TG package for
2x700MWe for RAPP 7&8
Order for supply & Installation of Control and
Instrumentation for Turbine Island SecondaryCycle System for 2x700 MW Kakrapar project in
Gujarat.
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Environment & Strategy Overview
Five years after the global financial crisis, the
economy and the industry are still reeling under the
crisis of confidence in India as well as in the world. We
too are affected by this crisis but we are not allowing
the crisis go waste. Your company is building new
competitive advantages by experimenting new ideas
and methods rapidly, frequently, and economically
not only with products and services but also with
business models, processes, and strategies. While wemay have to go through some pains in short term, I
have absolutely no doubt that your companys inherent
technology strength, highly committed manpower,
manufacturing prowess and innovation ecosystem will
enable us to recapture the growth once Indian
economy moves to another growth trajectory in near
future.B Prasada Rao
Chairman & Managing Director
49thAGM, Sept 20, 2013
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6 111113
Thank you!
Powering Progress
Brightening Lives
Cautionary Statement: Statements in this presentation describing the companys objectives, estimates, expectations or predictions may be
forward looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those
expressed or implied. Important factors that could make a difference to the companys operations include global and Indian demand supply
conditions, finished goods prices, cyclical demand and pricing in the companys principal markets, changes in government regulations, tax regimes,
economic developments within India and the countries within which the company conducts business and other factors such as litigation and labour
negotiations. The company assumes no responsibility to publicly amend, modify or revise any forward looking statement, on the basis of any
subsequent development, information or events, or otherwise.